Iran's Currency Regains Lost Ground After Limited US Strikes

Iran’s currency rose significantly on Saturday following what was perceived as limited US retaliatory air strikes against a series of targets in Iraq and Syria Friday night.

The rial, which had sharply fallen during the past ten days, regained around 30 percent of its value against the US dollar and other major currencies. The dollar had risen to almost 590,000 rials on January 29, after an attack on a US base in Jordan the previous day that killed three US soldiers and prompted fears of direct US retaliation against Iran.

The deadly drone attack followed 160 previous attacks against US forces in the region since mid-October, as well as attacks on international shipping by Iran’s Houthi allies in the Red Sea.

On Saturday, the dollar was trading at 565,000 rials in Tehran’s unofficial currency market. Before tensions rose during January the rial hovered around 510,000 per dollar.

The US response to the deadly attack took days to materialize, during which Washington signaled that it would not attack Iran directly and did not want escalation. Reports indicated that during this window of reprieve, Iran evacuated key personnel and emptied bases used by its proxy forces.

Iranian government media on Saturday highlighted rial’s recovery and the limited nature of the US strikes.

Iran’s economy suffering from a 50-percent annual inflation rate is vulnerable to a rising dollar, which can only lead to higher consumer prices and anger among its population.